High hopes for lower fares

While Comair is still disputing the granting of FlySafair’s domestic air service licence, the travel trade in general has welcomed the prospect of a new low-cost carrier in SA’s skies, which will help drive down air ticket prices.
FlySafair is set to launch early in the second half of this year, says Chief Financial Officer, Elmar Conradie. He says the airline will most likely launch a schedule of six daily flights between Johannesburg and Cape Town, building up to the 10 flight flights a day it originally planned to operate last year. Initially, booking will only be possible on FlySafair’s website, but Conradie says the airline is looking at GDS options.

“A new LCC entrant will be a welcome relief to the domestic traveller, especially in the leisure sector,” says Eric Sakawsky, Flight Centre’s GM of Corporate. He adds that increased competition should see a significant reduction in domestic airfares making travel more affordable in a tough economic client. “This will certainly help stimulate travel demand.”
Sean Hough, CEO of Pentravel, says: “Competition is important and we need the capacity in high season. Return fares from Johannesburg to Cape Town at any peak are between R6 500 and R8 000 in economy class, so there is an opportunity for anyone to win on price.”
Chris Zweigenthal, CEO of Aasa, says the industry and market has been expecting the launch of a new LCC for some time. “FlySafair will enter a very competitive market and one would expect a lot of interest in the new airline from consumers with the expectation of lower fares and a new flight offering. I am sure that the existing airlines will respond. The appearance of the new entrant FlySafair, who is also an Aasa member, is welcomed and we wish them well.”
Garth Wolff, CEO of eTravel, agrees that there is enough demand to warrant a new player in the market, as the current flights are often full. “The question is whether the new entrant has the aircraft that will be as efficient as the current market players. This will play a role in the long-term viability,” he says.
But Jonathan Gerber, Director at TAG Travel, isn’t convinced. “The market is not big enough to sustain SAA, Mango, BA, kulula, SAX, SA Airlink, FlySafair, etc. They fly old planes that guzzle gas and then they try and sell at reduced rates? That doesn’t sound like a viable business model.”
He adds that because the consumer is price sensitive, FlySafair will get a fair share of customers. “If the price is right people will fly. The consumer, however, will get caught at some stage and then cry foul when the airline shuts down over a long weekend or a busy travel time. But don’t worry, us travel agents will be there to pick up the pieces,” says Jonathan.
Conradie doesn’t think FlySafair’s grounding last year will dissuade people from booking flights on the airline. “We believe the way we handled the whole situation last year will probably strengthen our position in the market. We refunded all tickets within two or three days and passengers were offered tickets on Comair,” he says.
Sakawsky says although travellers will naturally be sceptical of any new entrant because of the turbulent history SA has experienced with local airlines, he believes FlySafair could be a serious contender in the LCC space in the next few years. “If we look at the last 10 years we have seen Nationwide, 1time, Velvet Sky, Skywise and the taxi operator Santaco either shutting their doors or failing to open them in the first place. Safair has been a reputable aviation company for many years. Granted it hasn’t operated as an LCC but it has modern aircraft, a licence to operate and, importantly, a team of very capable individuals operating it,” he says.
Meanwhile, Comair has requested that the Air Services Licensing Council (ASLC) provide reasons for dismissing its objections as well as the decision to grant the licence to FlySafair. “Once the reasons have been disclosed to Comair we will consult with our legal team whether sufficient grounds exist to take the decision of the ASLC on review in the High Court,” says Erik Venter, CEO of Comair.
Comair’s objections are based on the “opaque nature of the new shareholding structure of Safair.”
NdizaSafair  owns 25,14% of FlySafair; ASL Aviation Group 25%; and the Safair Investment trust 49,86%, as part of a management buy-out (the beneficiaries being Conradie; CEO, Dave Andrew and Director, Wimpie Davidson).
“We can’t comment on what Comair will or will not do… We can’t see on what basis they would challenge the licence though,” says Conradie.

 

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